Signals | Is a high-return signal worth subscribing to?
Because it is impossible to achieve a high winning rate, high payout ratio, and high trading frequency simultaneously, no trading strategy can be perfect, but can only find one that suits your personality. If you are not very comfortable facing losses and cannot accept your own investment failures, then you are more suitable for high-winning rate strategies. Today, we will take a high winning rate strategy @PUTRA KADES #1 as an example to discuss the advantages and disadvantages of high winning rate strategies.
Firstly, this signal provider introduces itself as "Follow and counter trend strategy, Scalping and positioning", which means using moving averages to identify market trends and price waves within 5 minutes or shorter timeframes for entry, with take profits set at 2-5 pips and stop losses controlled within 5% of equity. This logic sounds reasonable, but how good are the actual results?
It can be seen that within 49 weeks there were a total of 4,847 trades, with a winning rate of 97.15%, and most profits were made quickly. The total profit from closing was $10,320, with an annual profit ratio of 143%, exceeding the 70% of traders.
The returns are so high, is this system worth subscribing to? Not really!
Firstly, there is the issue of spread costs. The signal has an average of 14 trades per day. Assuming the average spread per trade is 2.5 pips, the spread costs for the whole year would be 12,775 pips, producing high-frequency trading costs from high-frequency trades. Secondly, the risk-return ratio - the average holding time of losing trades (12.1 days) is 7 times that of winning trades (1.7 days). @PUTRA KADES' idea is to let losing positions slowly turn into small profits or even gains as long as the drawdown stays within the preset range. But GBP/USD is notoriously volatile in the market and it is easy to produce cliff-like price actions with huge losses if encountered.
In summary, intraday trading strategies with high winning rates can make money in most months with fast entry and exit and no overnight risks. But if encountering large fluctuations, the losses could be much greater than expected, with high spread costs as well.
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